Negative electricity prices typically occur in Germany due to the oversupply of renewable energies and offer industrial companies the opportunity to benefit from cheap energy. Companies can increase their production and optimize their energy infrastructure to utilize excess energy, which contributes to lowering energy costs and achieving sustainability goals.

‍

How do negative electricity prices occur?

There are situations where negative prices can occur in the German electricity market. This usually happens when the supply of electrical energy exceeds demand. Negative prices are a result of the merit-order effect, where renewable energy sources like wind and solar have priority because their production costs are often lower than those of conventional power generators.

If, for example, on a sunny and windy day, renewable energy sources generate a high amount of electricity while the demand is relatively low, there can be an oversupply on the electricity exchange. In such situations, particularly the operators of conventional power plants must reduce or even shut down their production to keep the grid stable. However, shutting down power plants is usually associated with costs. In addition, conventional power plant operators are often also heat producers (e.g., through combined heat and power) and are obliged to feed into an industrial or municipal heat network (keyword: conventional base). To avoid these costs or to maintain obligations, these power plant operators offer to buyers at negative prices to avoid shutting down. Negative prices typically occur during times of high renewable energy supply and low demand in the electricity markets.

Source: https://www.energy-charts.info/charts/price_spot_market/chart.htm?l=en&c=DE&week=26

How can industrial companies benefit from negative electricity prices?

Negative electricity prices provide German industrial companies with a unique opportunity to benefit from cheap energy. With negative prices, companies receive money for taking on the excess electricity.

‍

This creates several opportunities for industrial companies:

• Increase production and ramp up production facilities to utilize the excess electricity

• Use energy storage systems like batteries to store excess energy for later use.

• Optimize energy infrastructure, e.g., by expanding energy storage systems or installing electrolyzers for hydrogen production.

• Reduce their own electricity production (e.g., rooftop solar system) in case of low grid fees.

‍

By using flexible production processes, companies can maximize their energy intensity while minimizing their costs. However, a power tariff that includes a variable pricing component is a prerequisite for cost reduction so that the savings actually reach the company. Since negative prices are almost always associated with a high share of renewable energies in the grid, sustainability goals can also be better achieved.

‍

Volatile prices can prompt companies to optimize their energy infrastructure to utilize excess energy. This could include expanding energy storage systems like batteries or installing electrolyzers for hydrogen production. Cheap electricity can be used in hydrogen production, which in turn can be used as a clean fuel in various industrial processes. It is important to note that negative electricity prices are not permanent and depend on many factors. Therefore, industrial companies should design their production planning and energy infrastructure flexibly to take advantage of such opportunities.

‍

‍

How do I learn about negative electricity prices?

Negative electricity prices can be used meaningfully, especially when they are known in advance. For example, at the electricity market, the price of the day-ahead auction can be used - the price for electricity delivery the next day. This auction is based on hourly contracts, which set the price for delivering a specific amount of electricity for a specific hour of the following day. Companies that have a power contract with a variable price component or even participate in electricity trading can use these favourable hours to save on energy costs. In addition to the data from the electricity exchange, there are also specialized data providers that provide price forecasts for longer periods.

‍

Additionally, the forecasting of one's own consumption patterns should also be considered. The combination of consumption and price forecasts can be used, for example, in weekly production planning to produce as cost-efficiently and sustainably as possible.

‍

‍

Conclusion: Negative electricity prices reward companies with flexible electricity consumption

Overall, negative electricity prices provide German industrial companies with the opportunity to reduce their energy costs and achieve their sustainability goals. By utilizing excess energy, they can not only gain economic advantages but also contribute to stabilizing the electricity grid and promoting the energy transition.

‍

trawa provides customers with a detailed electricity sourcing dashboard that allows for early predictions of negative prices and optimizes individual production and consumption planning accordingly. Additionally, trawa can optimize your local battery and charging infrastructure based on electricity prices.